Pension vs Salary Calculator

Pension vs Extra Salary

The decision between taking extra money as salary or contributing it to your pension depends on several factors including your tax rate, employer matching, time to retirement, and whether you need access to the money before retirement age. In most cases, the pension route provides a significantly better long-term outcome due to tax relief and employer contributions.

The Power of Employer Matching

If your employer offers matching contributions, this is one of the most compelling reasons to choose the pension route. An employer match of even 3-5% effectively gives you an immediate return on your contribution before any investment growth. Combined with tax relief, the pension option can be worth 50% or more than the equivalent salary.